Dear Chairman Simons and Secretary of Defense Austin III,
I am writing to urge you to use your authority to review the potential merger between Lockheed Martin and Aerojet Rocketdyne, and determine if this deal could create risk for both our national security and the millions of Americans who expect that the Federal Government ensures that their tax dollars are spent responsibly.
As someone who has dedicated most of my adult life to public service, including enlisting in the Army after the September 11th attacks, and serving multiple deployments in Iraq, Afghanistan and elsewhere in the Global War on Terror, I believe that our leadership in Washington has a responsibility to ensure that potential mergers, especially those impacting the National Security sector, do not defy antitrust efforts. This is one of the reasons I helped launch the group Centrist Democrats of America, fighting for common sense solutions to policy challenges facing the nation, and we have a current focus on the serious issue of anti-competitive and monopolistic mergers.
As you are aware, in December 2020, defense contractor Lockheed Martin announced its plan to purchase and merge with Aerojet Rocketdyne in a $4.4 billion deal. While Lockheed Martin touts this acquisition as a strategic move to bolster our nation’s defense. In reality, this merger would create a serious problem possibly eliminating any real competition for the development of new missile technology -- particularly in hypersonic missiles.
This is because Lockheed Martin is not the only contractor that Aerojet provides propulsion technology to; Lockheed, Boeing, Raytheon Technologies and Northrup have all partnered with Aerojet for their technology, and these competitors will virtually be eliminated from the field if Lockheed and Aerojet combine.
Aerojet is the sole provider of Divert and Attitude Control Systems (DACS), a high-precision, quick-reaction propulsion system that positions the interceptor to successfully defeat an incoming ballistic missile.
In 2017, Aerojet was chosen to “provide the main propulsion for the Boeing and the U.S. Defense Advanced Research Projects Agency (DARPA) reusable Experimental Spaceplane (XS 1),” according to a press release on the company’s website.
Aerojet provides the majority of solid rocket motors for Raytheon’s standard missiles, including the SM-2 missile, SM-3 interceptor and SM-6 missiles.
Simply put, should this proposed merger take place, how can we ensure that Lockheed Martin does not use its ownership of Aerojet Rocketdyne to freeze out competitors and block other defense contractors from accessing Aerojet Rocketdyne rocket technology? And, if this proposed merger is allowed, will Lockheed Martin use this competitive advantage to their benefit? If so, it could stifle innovation in missile technology through reduced competition and eliminate any incentive for Lockheed Martin to contain costs that will be borne by the American taxpayer.
In Lockheed Martin’s Q4 earnings call on January 26, 2021, CEO James Taiclet went as far to say that he believes the U.S. defense systems should be more like that of China, as a justification for the merger, saying government officials should ask themselves: “How does China operate its defense industrial base? How does it organize it and what are the capabilities and velocity again that comes from that?” Not only is Mr. Taiclet encouraging the U.S. government to look to our adversaries for a defense system model, but he is also acknowledging a “state owned” or monopolistic nature of the merger his company is asking the FTC to approve.
Please keep in mind, Lockheed Martin has a history of wasteful spending, most concerningly as the lead contractor in the F-35 project, the costliest defense program in history that the Project on Government Oversight said “may truly never be ready for combat.”
As I’m sure you agree, our nation’s security is too high a price to pay for a poorly planned business decision. While in the past, consent decrees have been put into place to avoid anti-competitive mergers, prior mergers show us that is simply not enough. If we want to prioritize the American people and our safety, I strongly encourage you to take a hard look at this proposed merger.
See the full letter by clicking the link below.